All Forum Posts by: Jacob Eddy

Thanks Ann Marie.  What kind of interest rates would we be looking at for this kind of option?  Would it be much higher than the conventional route at 5%? 

We recently went under contract on a Triplex for $380K and can get a conventional mortgage for a rate of 5% with a 25% down payment of $95K.  The property has a shell that can easily be finished out, making it a Quadplex, and would cost an additional $70K to add the 4th unit.  We can pay cash to have the 4th unit finished, then refinance the property to pull some of the money back out, but wanting to know if anyone would recommend another strategy instead?  This is our first decent size deal as investors and extremely new to thinking outside the box for financing any other way than a conventional mortgage.  Any advice is much appreciated!  Thank you! 

Would anyone know what the general Gross Rent Multiplier (GRM) is for the Asheville area for multi-family properties? I'm sure it differs based off of the area of town but the property I am looking at is in a nice residential neighborhood in South Asheville and is a duplex.

So I've read a few of the articles about a Luxury House Hack and hoping to get some feedback from the BP community about the numbers on a specific house.  We live in a vacation city in the mountains of NC, robust tourism, and around 4 million visitors annually.  The real estate market continues to soar and it's tough for people that live in this area to find affordable housing, which is why we are considering a Luxury House Hack. :)   We've come across a property in a very desirable residential neighborhood, and this house is unlike any other home in the community because it has been converted into a duplex, with the basement having a completely separate entrance, making it a 1 BR apartment.  The home has not hit the market yet and the asking price is $475 and needs $75 in renovations, so all in at $550.  The basement could easily rent for $1000 per month if we went the long term rental route, however if we Airbnb the basement, we could generate $100-$125 per night conservatively, or $1,500-$1875 based off 15 nights rented per month.  Due to many residents in our city going the Airbnb route, a lot of the HOAs within communities are cracking down and sometimes eliminating the option to Airbnb your home.  It is currently legal to Airbnb this home but if things change, we want to plan for a worst case scenario and have the fall back of a long term rental at $1000 per month.  If we fall back on this option, are we reasonable to place a 1% rule value on the rental portion of the home?  In other words, if the all in price of the home is $550, can we really say that we only paid $450 for the home if we plan to rent out the basement long term?  The 1% rule is nearly impossible to meet in our area so we feel like it would be a solid option for us, considering it's the neighborhood we want to live in and it gives us options to create income.  When it comes time to re-sell the home one day, the renovation price of $75 is already including adding stairs inside the house that connect the upstairs to the basement so the entire square footage can be counted and maximize the price of the home.  Any feedback is welcomed.  Thank you! 

Hey Jonathon, it's at Lake Julian Trails if you are familiar with it off Airport Rd and unfortunately right behind the Duke Power Plant which could be seen as a negative. Are your thoughts still the same?

We were given a 60 day notice but just heard from the owner yesterday about her being willing to sell it to us.

Thanks to everyone for the input. If we were able to get it at $145K (not sure if the seller would go this low), would that make it worth it, if we were able to sell it down the road for at $155K? I would want to go on the conservative end for resale seeing that it's a townhouse. $155K minus the 6% to sell would be around $145. We would put down 20% to avoid PMI so roughly $30K down payment vs. if we ended up renting we would throw away around $15K per year.

We currently rent a townhouse in the very hot market of Asheville, NC.  Got an unexpected notice to vacate at the end of June due to the owner selling the townhouse and have less than 30 days to get out.  Townhouse is a 2 bedroom that rents out for $1200 and asking price is going to be $169K, yet the seller says they are willing to take $155K from us since we aren't working with a realtor.  This does not meet even the 1% rule and it is an extreme challenge to find much in the Asheville market that does meet a 1% rule as we've been looking for a while now.  The least we can move into another 2 BR apartment is still $1200 per month.  If the place had a fresh coat of paint with the fixtures updated, it would probably rent for $1300.  Also has HOAs of $95 per month.   We would not want to live there long term as we're house hunting in the $300-500K range but can't seem to find anything worth buying right now.  The idea would be to buy this townhouse as a short term solution and keep it as a rental or Airbnb once we find the home we're looking for long term.  What is a the most we should be willing to pay so we're not throwing away our money in rent for another year? 

Naveen, that's a very simple what to look at it. Ha!  Just wanted to make sure I'm not missing anything.  Thanks for the response and easy explanation. 

Please disregard the $5-10K in rehab piece. This obviously would not make the property 70% off. Essentially what I am asking is this: is one strategy more powerful than the other? If so, what specifically? Thanks!